{"id":4135,"date":"2023-10-08T21:45:00","date_gmt":"2023-10-08T16:15:00","guid":{"rendered":"https:\/\/www.complianceprime.com\/blog\/?p=4135"},"modified":"2024-02-08T12:16:48","modified_gmt":"2024-02-08T06:46:48","slug":"what-is-third-party-sick-pay-reporting","status":"publish","type":"post","link":"https:\/\/www.complianceprime.com\/blog\/2023\/10\/08\/what-is-third-party-sick-pay-reporting\/","title":{"rendered":"What is Third-Party Sick Pay Reporting?"},"content":{"rendered":"\n<p>Navigating the world of taxes and payroll can be a complex and often confusing task for both individuals and businesses. If you are <a href=\"https:\/\/www.complianceprime.com\/details\/1281\/year-end-2023\">preparing for the year-end of 2023 and the beginning of 2024<\/a>, one area that frequently raises questions is third-party sick pay reporting.<\/p>\n\n\n\n<p>In this blog, we&#8217;ll break down what third-party sick pay reporting is, why it&#8217;s important, and how it impacts both employers and employees.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Understanding Sick Pay<\/h2>\n\n\n\n<p>Sick pay, as the name suggests, is money paid to employees who are unable to work due to illness or injury. It is a crucial employee benefit, providing financial support when individuals are unable to earn their regular income. Employers often provide sick pay to attract and retain talented employees while promoting a healthy work-life balance.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">First-Party Sick Pay vs. Third-Party Sick Pay<\/h2>\n\n\n\n<p>Before delving into third-party sick pay reporting, it&#8217;s essential to understand the distinction between first-party and third-party sick pay.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>First-Party Sick Pay<\/strong>: This is sick pay provided directly by the employer. The employer pays the employee during their sick leave and is responsible for reporting it to tax authorities.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Third-Party Sick Pay<\/strong>: now, what is <a href=\"https:\/\/www.complianceprime.com\/blog\/2021\/05\/23\/what-is-third-party-sick-pay\/\">third-party sick pay<\/a>? When employers contract with third-party insurance providers to administer sick pay benefits on their behalf. This means that the employer does not directly pay the sick employee; instead, the insurance company does. In such instances, reporting responsibilities shift to the third-party payer.<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is Third-Party Sick Pay Reporting?<\/h2>\n\n\n\n<p>Third-party sick pay reporting is the process of reporting sick pay provided to employees by a third-party entity (usually an insurance company). This reporting is a crucial compliance requirement for both employers and third-party payers to ensure accurate tax reporting.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Why is Third-Party Sick Pay Reporting Important?<\/h2>\n\n\n\n<p>Now, let\u2019s discuss why the this-party sick pay reporting is important:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Tax Compliance<\/strong>: Accurate reporting of sick pay is essential for compliance with tax laws and regulations. Failure to report third-party sick pay correctly can result in penalties and legal complications.<br><\/li>\n<\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"2\">\n<li><strong>Employee Documentation<\/strong>: Proper reporting ensures that employees receive accurate information about their income and taxes withheld. This transparency is crucial for employees to file their tax returns accurately.<br><\/li>\n<\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"3\">\n<li><strong>Audit Preparedness<\/strong>: Accurate reporting can help employers and third-party payers be prepared for potential tax audits. Having well-maintained records and reports can simplify the auditing process.<\/li>\n<\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"4\">\n<li><strong>Government Reporting<\/strong>: Accurate reporting also ensures that the government receives the necessary tax information, contributing to the overall functioning of the tax system.<\/li>\n<\/ol>\n\n\n\n<div style=\"color:#0E1851;margin-top:20px;font-size:28px;font-weight:bold;\">Related Webinars<\/div><div style=\"width:100%;height:auto;overflow:hidden;overflow-x:auto;margin:20px 0;\"><div style=\"width:calc(3 * 260px);\"><div style=\"width:250px;height:350px;background-color:#D2E0FF;background:url(https:\/\/www.complianceprime.com\/assets\/images\/wdt-back.png);background-repeat:no-repeat;background-size:cover;border-radius:10px;margin-right:10px;float:left;text-align:center;padding:25px 10px 0 10px;cursor:pointer;\" onclick=\"location.href='https:\/\/www.complianceprime.com\/details\/1850\/fmla-2026?utm_source=cp_blog'\"><img decoding=\"async\" style=\"width:135px;height:135px;border-radius:50%;border:2px solid #2B58B5;padding:3px;\" src=\"https:\/\/www.complianceprime.com\/image.php?src=https:\/\/www.complianceprime.com\/uploads\/img_upload\/be9bd7c0b9625126f985b421036a9339.jpg&w=200&h=200&zc=1&s=1\" alt=\"Speaker\"><div style=\"color:#0E1851;margin-top:5px;font-size:18px;font-weight:bold;line-height:22px;max-height:65px;overflow:hidden;\">FMLA in 2026: New DOL Guidance, State Paid Leave Expansions & Compliance Risks Every Employer Must Know<\/div><div style=\"clear:both;\"><\/div><div style=\"margin:10px auto 0 auto;display:inline-block;\"><div style=\"width:20px;float:left;\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\" id=\"IconChangeColor\" height=\"16\" width=\"16\"><path d=\"M160 32V64H288V32C288 14.33 302.3 0 320 0C337.7 0 352 14.33 352 32V64H400C426.5 64 448 85.49 448 112V160H0V112C0 85.49 21.49 64 48 64H96V32C96 14.33 110.3 0 128 0C145.7 0 160 14.33 160 32zM0 192H448V464C448 490.5 426.5 512 400 512H48C21.49 512 0 490.5 0 464V192zM64 304C64 312.8 71.16 320 80 320H112C120.8 320 128 312.8 128 304V272C128 263.2 120.8 256 112 256H80C71.16 256 64 263.2 64 272V304zM192 304C192 312.8 199.2 320 208 320H240C248.8 320 256 312.8 256 304V272C256 263.2 248.8 256 240 256H208C199.2 256 192 263.2 192 272V304zM336 256C327.2 256 320 263.2 320 272V304C320 312.8 327.2 320 336 320H368C376.8 320 384 312.8 384 304V272C384 263.2 376.8 256 368 256H336zM64 432C64 440.8 71.16 448 80 448H112C120.8 448 128 440.8 128 432V400C128 391.2 120.8 384 112 384H80C71.16 384 64 391.2 64 400V432zM208 384C199.2 384 192 391.2 192 400V432C192 440.8 199.2 448 208 448H240C248.8 448 256 440.8 256 432V400C256 391.2 248.8 384 240 384H208zM320 432C320 440.8 327.2 448 336 448H368C376.8 448 384 440.8 384 432V400C384 391.2 376.8 384 368 384H336C327.2 384 320 391.2 320 400V432z\" id=\"mainIconPathAttribute\" stroke-width=\"1\" stroke=\"#ff0000\" filter=\"url(#shadow)\" fill=\"#FB0351\"><\/path><filter id=\"shadow\"><feDropShadow id=\"shadowValue\" stdDeviation=\".5\" dx=\"0\" dy=\"0\" flood-color=\"black\"><\/feDropShadow><\/filter><filter id=\"shadow\"><feDropShadow id=\"shadowValue\" stdDeviation=\".5\" dx=\"0\" dy=\"0\" flood-color=\"black\"><\/feDropShadow><\/filter><\/svg><\/div><div style=\"float:left;margin-left:5px;font-size:12px;font-weight:bold;color:#FB0351;\">Jul 28th 2026 @ 01:00 PM ET<\/div><div style=\"clear:both;\"><\/div><\/div><div style=\"font-size:12px;color:#2B58B5;margin-top:-10px;\"><strong>Speaker: <\/strong>Melissa Fleischer, Esq<\/div><div style=\"width:120px;text-transform:uppercase;font-size:12px;color:#FB0351;border:2px solid #FB0351;border-radius:30px;padding:1px 5px;margin:10px auto;\">Learn More<\/div><\/div><div style=\"width:250px;height:350px;background-color:#D2E0FF;background:url(https:\/\/www.complianceprime.com\/assets\/images\/wdt-back.png);background-repeat:no-repeat;background-size:cover;border-radius:10px;margin-right:10px;float:left;text-align:center;padding:25px 10px 0 10px;cursor:pointer;\" onclick=\"location.href='https:\/\/www.complianceprime.com\/details\/184\/intermittent-fmla?utm_source=cp_blog'\"><img decoding=\"async\" style=\"width:135px;height:135px;border-radius:50%;border:2px solid #2B58B5;padding:3px;\" src=\"https:\/\/www.complianceprime.com\/image.php?src=https:\/\/www.complianceprime.com\/uploads\/img_upload\/be9bd7c0b9625126f985b421036a9339.jpg&w=200&h=200&zc=1&s=1\" alt=\"Speaker\"><div style=\"color:#0E1851;margin-top:5px;font-size:18px;font-weight:bold;line-height:22px;max-height:65px;overflow:hidden;\">Intermittent FMLA Leave: Understand The Requirements And Prevent Abuse<\/div><div style=\"clear:both;\"><\/div><div style=\"height:45px;\"><\/div><div style=\"font-size:12px;color:#2B58B5;margin-top:-10px;\"><strong>Speaker: <\/strong>Melissa Fleischer, Esq<\/div><div style=\"width:120px;text-transform:uppercase;font-size:12px;color:#FB0351;border:2px solid #FB0351;border-radius:30px;padding:1px 5px;margin:10px auto;\">Learn More<\/div><\/div><div style=\"width:250px;height:350px;background-color:#D2E0FF;background:url(https:\/\/www.complianceprime.com\/assets\/images\/wdt-back.png);background-repeat:no-repeat;background-size:cover;border-radius:10px;margin-right:10px;float:left;text-align:center;padding:25px 10px 0 10px;cursor:pointer;\" onclick=\"location.href='https:\/\/www.complianceprime.com\/details\/210\/fmla-forms?utm_source=cp_blog'\"><img decoding=\"async\" style=\"width:135px;height:135px;border-radius:50%;border:2px solid #2B58B5;padding:3px;\" src=\"https:\/\/www.complianceprime.com\/image.php?src=https:\/\/www.complianceprime.com\/uploads\/img_upload\/1734613313_b52cd0f6720de185fe87.png&w=200&h=200&zc=1&s=1\" alt=\"Speaker\"><div style=\"color:#0E1851;margin-top:5px;font-size:18px;font-weight:bold;line-height:22px;max-height:65px;overflow:hidden;\">How to Use FMLA Forms to Your Advantage<\/div><div style=\"clear:both;\"><\/div><div style=\"height:45px;\"><\/div><div style=\"font-size:12px;color:#2B58B5;margin-top:-10px;\"><strong>Speaker: <\/strong>Susan Fahey Desmond<\/div><div style=\"width:120px;text-transform:uppercase;font-size:12px;color:#FB0351;border:2px solid #FB0351;border-radius:30px;padding:1px 5px;margin:10px auto;\">Learn More<\/div><\/div><\/div><\/div>\n\n\n\n<div style=\"height:6px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">How Does Third-Party Sick Pay Reporting Work?<\/h2>\n\n\n\n<p>The process of third-party sick pay reporting involves several steps:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Identification<\/strong>: Employers must first identify instances where third-party sick pay is applicable. This typically involves having a clear understanding of their insurance agreements and which employees are covered by third-party sick pay.<\/li>\n<\/ol>\n\n\n\n<div style=\"height:6px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ol class=\"wp-block-list\" start=\"2\">\n<li><strong>Report Generation<\/strong>: Once identified, employers or third-party payers generate reports detailing the sick pay provided to employees. These reports typically include the employee&#8217;s name, Social Security number, total sick pay amount, and tax withholdings.<br><\/li>\n<\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"3\">\n<li><strong>Submission to Tax Authorities<\/strong>: Employers or third-party payers must submit these reports to the relevant tax authorities, such as the Internal Revenue Service (IRS) in the United States. <br><br><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-form-8922\" target=\"_blank\" rel=\"noopener\">IRS Form 8922<\/a>, referred to as the &#8220;Third-Party Sick Pay Recap&#8221; in the United States, is used to record information on third-party sick pay provided to employees by third parties.<br><\/li>\n<\/ol>\n\n\n\n<ol class=\"wp-block-list\" start=\"4\">\n<li><strong>Employee Notification<\/strong>: Employees should also be provided with documentation detailing the sick pay they received and any tax withholdings. This is important for employees when filing their tax returns.<\/li>\n<\/ol>\n\n\n\n<div style=\"height:6px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<div style=\"height:6px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p>Third-party sick pay reporting is a critical aspect of tax compliance for both employers and third-party payers. Understanding the distinction between first-party and third-party sick pay, as well as the reporting requirements, is essential to ensure accuracy and avoid potential legal issues. By adhering to these reporting obligations, employers and third-party payers can contribute to a transparent and efficient tax system while providing vital support to employees during times of illness or injury.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Navigating the world of taxes and payroll can be a complex and often confusing task for both individuals and businesses. If you are preparing for the year-end of 2023 and&hellip;<\/p>\n","protected":false},"author":4,"featured_media":4136,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[4],"tags":[],"class_list":["post-4135","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-hr-blog"],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/posts\/4135","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/comments?post=4135"}],"version-history":[{"count":4,"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/posts\/4135\/revisions"}],"predecessor-version":[{"id":4571,"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/posts\/4135\/revisions\/4571"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/media\/4136"}],"wp:attachment":[{"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/media?parent=4135"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/categories?post=4135"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.complianceprime.com\/blog\/wp-json\/wp\/v2\/tags?post=4135"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}